Aluminum from United Co. Rusal, the recently sanctioned Russian miner, is looking for a new home. But nobody knows where that home can be.
Rusal produced 3.7 million tons of aluminum last year, but U.S. sanctions mean that almost no Western buyer, or Washington’s allies like Japan, will touch the metal not placed on exchanges before Rusal-branded products were banned, analysts say.
Read: Nickel prices rally to more than 3-year high on growing concerns over U.S. sanctions on Russia
China has more than enough of its own aluminum. Other countries unlikely to follow U.S. sanctions against Rusal aren’t big enough to mop up its metal.
Read: Russian sanctions could fuel another aluminum rally
That leaves Russia, which has bailed out the world’s second-largest aluminum producer before, as the most likely buyer. But that also threatens a stockpile of unused metal hanging over the market and its price.
On April 6, the U.S. sanctioned Oleg Deripaska, who controls Rusal, and other Russian individuals and entities. Following the sanctions, major commodities firms including Glencore PLC GLNCY, +0.42% and Rio Tinto PLC RIO, -0.23% have invoked force majeure, defaulting trading contracts with the miner, while traders elsewhere are scrambling to plug the gap left by the Russian company—which is responsible for 13% of the world’s non-Chinese supply.
An expanded version of this report appears on WSJ.com.
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